Test Bank For The Exploration of Economics International Edition 6th Edition by Robert L. Sexton

Test Bank For The Exploration of Economics International Edition 6th Edition by Robert L. Sexton

Chapter 3—Scarcity, Trade-Offs, and Production Possibilities

TRUE/FALSE

1.In a market economy, government officials make most production decisions in a centralized manner.

ANS:FPTS:1REF:p. 75

TOP: 3.1 The Three Economic Questions Every Society Faces | What Goods and Services Will Be Produced?

2.Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.

ANS:TPTS:1REF:p. 75

TOP: 3.1 The Three Economic Questions Every Society Faces | What Goods and Services Will Be Produced?

3.In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

ANS:FPTS:1REF:p. 76

TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?

4.An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.

ANS:TPTS:1REF:p. 82

TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve

5.Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.

ANS:FPTS:1REF:p. 76

TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?

6.High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

ANS:TPTS:1REF:p. 76

TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?

7.An economy that has many unemployed workers and idle factories is not operating efficiently.

ANS:TPTS:1REF:p. 84

TOP: 3.3 The Production Possibilities Curve | Inefficiency and Efficiency

8.The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

ANS:TPTS:1REF:p. 81

TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve

9.Any output combination outside the production possibilities curve is attainable in the current period only if prices decrease.

ANS:FPTS:1REF:p. 81

TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve

10.A decrease in the unemployment rate will shift an economy’s production possibilities curve outward.

ANS:FPTS:1REF:p. 84

TOP: 3.3 The Production Possibilities Curve | Inefficiency and Efficiency

11.An increase in available resources will tend to cause a society’s production possibilities curve to shift inward.

ANS:FPTS:1REF:p. 87

TOP: 3.4 Economic Growth and the Production Possibilities Curve | Generating Economic Growth

12.An improvement in technology will tend to cause a society’s production possibilities curve to shift outward.

ANS:TPTS:1REF:p. 87

TOP: 3.4 Economic Growth and the Production Possibilities Curve | Generating Economic Growth

13.The opportunity cost of a particular good tends to increase with its rate of output because some resources cannot be easily adapted from the production of one good or service to another.

ANS:TPTS:1REF:p. 84

TOP: 3.3 The Production Possibilities Curve | The Law of Increasing Opportunity Cost

14.The production possibilities curve for an economy that experiences a constant opportunity cost of production is linear (a straight line).

ANS:TPTS:1REF:p. 84

TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve

15.The law of increasing opportunity costs implies that a society’s production possibilities curve will be a straight line.

ANS:FPTS:1REF:p. 84

TOP: 3.3 The Production Possibilities Curve | The Law of Increasing Opportunity Cost